EXHIBIT 10
SECOND AMENDMENT TO CREDIT AGREEMENT
This SECOND AMENDMENT TO CREDIT AGREEMENT (this "Amendment"), dated as
of August 13, 2004, is entered into among (1) POINT.360, a California
corporation (the "Borrower"), (2) the several banks and other financial
institutions parties to the Credit Agreement referred to below (the "Lenders")
and (3) UNION BANK OF CALIFORNIA, N.A. ("UBOC"), as agent for the Lenders (in
such capacity, the "Agent").
RECITALS
A. The Borrower, the Lenders and the Agent have entered into that
certain Credit Agreement dated as of March 12, 2004, as amended by a First
Amendment to Credit Agreement dated as of July 1, 2004 (the "Credit Agreement").
Capitalized terms used herein and not defined shall have the meanings ascribed
to them in the Credit Agreement.
B. The Borrower desires to incur the Mortgage Debt from Bank of
America, N.A. to finance the Borrower's purchase of the New Premises.
C. The Borrower has requested that the Lenders amend the Credit
Agreement to (i) increase the revolving loan facility by $1,923,750 and (ii)
permit the specific terms of the Mortgage Debt, as well as make certain other
changes to the Credit Agreement. The Lenders have agreed to the foregoing
requests, subject to the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein, the parties hereto hereby agree as follows:
SECTION 1. Amendments to Credit Agreement. The Credit Agreement is
hereby amended as follows:
(a) The following new definitions are added to Section 1.1 of the Credit
Agreement, in each case in appropriate alphabetical order:
"`Holdback Account': the Borrower's deposit account held by Bank of
America, N.A. as required by the Mortgage Debt Loan Agreement; provided, that,
for the six month period following the effectiveness of the Mortgage Debt Note,
the balance of the Holdback Account shall not exceed $585,000 plus the amount
necessary for the Borrower to pay its next two regularly scheduled installments
of principal and interest under the Mortgage Debt Note; provided further, that,
at all times thereafter until the maturity date of the Mortgage Debt, the
balance of the Holdback Account shall not exceed the amount necessary for the
Borrower to pay its next two regularly scheduled installments of principal and
interest under the Mortgage Debt Note. Notwithstanding any provision of this
Agreement or the other Loan Documents to the contrary, the Borrower shall not be
required to deliver to the Agent an executed Control Agreement with respect to
the Holdback Account."
"Mortgage Debt Loan Agreement: that certain Standing Loan Agreement and
Swap Commitment dated as of July 26, 2004 between the Borrower and Bank of
America, N.A. establishing the terms and conditions of the Mortgage Debt.
"Mortgage Debt Note: that certain Promissory Note dated as of July 26,
2004 executed by the Borrower in favor of the Bank of America, N.A. evidencing
the Mortgage Debt.
"Second Amendment": Second Amendment to Credit Agreement dated as of
August 13, 2004 among the Borrower, the Lenders and the Agent.
"Second Amendment Closing Date": the date on which all conditions to
effectiveness of the Second Amendment have been satisfied.
(b) The definition of "Funded Debt" contained in Section 1.1 of the
Credit Agreement is hereby restated in its entirety to read as follows:
"`Funded Debt': the sum of the outstanding principal balance of all
Indebtedness (including, but not limited to, Indebtedness to the Lenders
and Capitalized Lease Obligations) of Borrower and its Subsidiaries on a
consolidated basis, excluding the outstanding principal balance of the
Mortgage Debt up to a maximum amount not exceeding $6,428,625, as
reduced from time to time by the repayment thereof."
(c) In the definition of "Term Loan B" in Section 1.1 of the Credit
Agreement and in Section 2.18(b) of the Credit Agreement, each reference to the
word "Borrowers" is hereby replaced with the word "Borrower."
(d) The definition of "Term Loan B Maturity Date" contained in Section
1.1 of the Credit Agreement is hereby restated in its entirety to read as
follows:
"`Term Loan B Maturity Date': July 1, 2009, or such earlier date as the
Term Loan Bs shall mature in accordance with the terms hereof (whether
by acceleration or otherwise)."
(e) In Section 1.1 and Section 2.2 of the Credit Agreement, each
reference to the term "Term Note A" is hereby replaced with a reference to "Term
A Note."
(f) The following sentence is hereby inserted at the end of Section
5.1(d) of the Credit Agreement to read in full as follows: "Notwithstanding the
foregoing, with respect to the first three fiscal quarters of each year, the
financial statements for the third month of each such quarter may be delivered
up to 45 days after the end of such month."
(g) Section 6.1(e) of the Credit Agreement is hereby amended by
inserting the phrase "and $1,500,000 for related building improvements"
immediately following the phrase "$8,571,500 for the purchase of the New
Premises."
(h) Section 6.2(g)(iii) of the Credit Agreement is hereby restated in
its entirety to read as follows: "(iii) such debt shall be secured solely by the
real property purchased with the proceeds thereof, the Holdback Account and any
other property related thereto as approved by the Majority Lenders in writing;".
(i) Section 7(c) of the Credit Agreement is hereby restated in its
entirety to read as follows: "(c) The Borrower shall default in the observance
or performance of any agreement in Section 5.4(ii), 5.9, 5.11(a), 5.12, 5.13 or
5.14, or any provision of Section 6 or the definition of `Holdback Account';
or".
(j) As of the Second Amendment Closing Date, subject to satisfaction of
the conditions set forth in Section 2, the Aggregate Revolving Loan Commitment
is increased from $10,000,000 to $11,923,750. Separately, concurrently herewith
UBOC and U.S. Bank National Association ("U.S. Bank") are entering into an
Assignment and Acceptance (the "U.S. Bank Assignment") pursuant to which U.S
Bank will acquire from UBOC a portion of its Term Loan B Commitment and, on a
one-time basis, (i) the parties hereto agree to such assignment notwithstanding
the minimum assignment provision of Section 9.6(c) of the Credit Agreement and
(ii) the Agent hereby agrees to waive the $3,500 processing fee required by
Section 9.6(e). As a result of such increase and such assignment, the three
lines below UBOC's signature block and U.S. Bank's signature block to the Credit
Agreement are restated in their entirety, respectively, to read as follows:
(i) UBOC's restated Commitments:
"Revolving Loan Commitment: $6,624,305.56
Term Loan A Commitment: $4,444,444.44
Term Loan B Commitment: $2,567,592.60".
(ii) U.S. Bank's restated Commitments:
"Revolving Loan Commitment: $5,299,444.44
Term Loan A Commitment: $3,555,555.56
Term Loan B Commitment: $2,054,074.07".
SECTION 2. Conditions Precedent. This Amendment shall become effective
as of the date first set forth above upon receipt by the Agent of the following,
in each case in form and substance reasonably satisfactory to the Agent:
(a) this Amendment, duly executed by the Borrower, the Lenders and the
Agent;
(b) Revolving Notes, duly executed by the Borrower in favor of the
Lenders;
(c) the U.S. Bank Assignment, accompanied by such payments as are
contemplated thereby;
(d) Term B Notes, duly executed by the Borrower in favor of the Lenders;
(e) evidence that the Mortgage Debt shall have been consummated in
accordance with the Credit Agreement, as amended hereby, including a copy of all
Mortgage Debt documentation, certified as true and correct and in full force and
effect by a Responsible Officer of the Borrower;
(f) resolutions of the Borrower authorizing the Mortgage Debt, certified
by a Responsible Officer of the Borrower;
(g) a fee equal to $4,809.38 (which is 0.25% of the increase in the
Aggregate Revolving Loan Commitment as of the Second Amendment Closing Date),
for the account of the Lenders on a pro-rata basis, in immediately available
funds;
(h) payment of the Agent's fees, costs and expenses, including legal
fees and reimbursement of due diligence expenses, owing pursuant to Section 9.5;
and
(i) such other approvals, opinions, evidence and documents as any
Lender, through the Agent, may reasonably request; and the Agent's reasonable
satisfaction as to all legal matters incident to this Amendment.
SECTION 3. Reference to and Effect on the Credit Agreement and the Other
Loan Documents.
(a) Upon the effectiveness of this Amendment, each reference in the
Credit Agreement to "this Agreement," "hereunder," "hereof," "herein" or words
of like import referring to the Credit Agreement, and each reference in the
other Loan Documents to "the Credit Agreement," "thereunder," "thereof,"
"therein" or words of like import referring to the Credit Agreement, shall mean
and be a reference to the Credit Agreement, as amended hereby.
(b) Except as specifically amended herein, the Credit Agreement and all
other Loan Documents are and shall continue to be in full force and effect and
are hereby in all respects ratified and confirmed.
(c) The execution, delivery and effectiveness of this Amendment shall
not operate as a waiver of any right, power or remedy of the Agent or the
Lenders under the Credit Agreement or any other Loan Documents, nor constitute a
waiver of any provision of the Credit Agreement or any other Loan Documents.
SECTION 4. Representations and Warranties. The Borrower represents and
warrants, for the benefit of the Lenders and the Agent, as follows: (i) it has
all requisite power and authority under applicable law and under its charter
documents to execute, deliver and perform this Amendment, and to perform the
Credit Agreement as amended hereby; (ii) all actions, authorizations and
consents (corporate, regulatory and otherwise) required for it to execute,
deliver and perform this Amendment, and to perform the Credit Agreement as
amended hereby, have been taken and/or received; (iii) this Amendment, and the
Credit Agreement, as amended by this Amendment, constitute the legal, valid and
binding obligation of it enforceable against it in accordance with the terms
hereof, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the enforcement
of creditors' rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law); (iv) the execution,
delivery and performance of this Amendment, and the performance of the Credit
Agreement, as amended hereby, will not (a) violate or contravene any Requirement
of Law, (b) result in any material breach or violation of, or constitute a
material default under, any agreement or instrument by which it or any of its
property may be bound, or (c) result in or require the creation of any Lien upon
or with respect to any of its properties, whether such properties are now owned
or hereafter acquired, except pursuant to the Loan Documents; (v) the
representations and warranties contained in the Credit Agreement and the other
Loan Documents are correct in all material respects on and as of the date of
this Amendment, before and after giving effect to the same, as though made on
and as of such date, except to the extent that such representations and
warranties expressly relate to an earlier date; and (vi) no Default has occurred
and is continuing.
SECTION 5. Execution in Counterparts. This Amendment may be executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed to be
an original and all of which taken together shall constitute but one and the
same agreement. Delivery of an executed counterpart of a signature page to this
Amendment by telecopier shall be effective as delivery of a manually executed
counterpart of this Amendment.
SECTION 6. Governing Law. This Amendment and the rights and obligations
of the parties under this Amendment shall be governed by, and construed and
interpreted in accordance with, the law of the State of California (without
reference to its choice of law rules).
* * * *
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed and delivered by their proper and duly authorized officers as of
the day and year first above written.
POINT.360, a California corporation
By: /s/ Xxxx X. Steel
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Name: Xxxx X. Steel
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Title: Chief Financial Officer
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UNION BANK OF CALIFORNIA, N.A.,
as Agent and as a Lender
By: /s/ Xxxx Xxxx
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Name: Xxxx Xxxx
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Title: Vice President
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U.S. BANK NATIONAL ASSOCIATION, as a Lender
By: /s/ Xxxxxxx X. Xxxxxxxx
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Name: Xxxxxxx X. Xxxxxxxx
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Title: Vice President
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